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Summary

  • Q2 2014 EPS reported of $0.39 per share is up 8% Y/Y.
  • Q2 earnings have confirmed my earlier opinion of the stock.
  • In addition, GE expects its Alstom acquisition to add $0.06 to $0.09 to EPS by 2016.

General Electric (NYSE:GE) reported earnings today that were roughly in line with EPS and revenue estimates. EPS came in at $0.39, which was in line with analyst estimates. Revenue came in at $36.2 billion, which was $110 million below estimates. Although it missed analyst estimates, GE reported revenues that were up about 3% from the year-ago period.

In its earnings press release, GE highlighted better margins in the first half of 2014, citing a 30 bps increase. In addition, total equipment and services backlog increased to a whopping $246 billion -- up $23 billion from the year ago period.

In my previous article about GE titled, "General Electric: Changing Its Massive Momentum", I showed that in many ways GE was still struggling to recover from the Great Recession. After this earnings report, I still believe the forward P/E for the stock is pricey and I don't see much upside in the near term. However, the rise in margins is a good sign and should be a key metric to watch for any investor interested in the company. Also, the Alstom (OTCPK:ALSMY) merger bears close scrutiny as large foreign mergers are often unpredictable. In addition, GE still appears to be a solid income investor pick. The stock is due for a dividend hike for the December period and I expect a rise of 9% to 13% to the quarterly payout.

Source: Update: General Electric Earnings